Cape Town – The City Bowl and in fact anywhere close to the city centre where big business is based, has become property gold for developers and homeowners alike.
And the sectional title market, with the allure of secure apartments, is ahead of the game, with properties being sought from Observatory to Vredehoek and the Atlantic seaboard.
In fact, in Sea Point alone sectional title unit sales went from a total of R2.25bn in the first and second quarter of 2015 to R2.7bn for the same period in 2016, says Basil Moraitis, Pam Golding Properties area manager for Atlantic seaboard.
Moraitis says semigration is "a real issue and with buyers moving to the Western Cape, and particularly the Atlantic Seaboard. The dearth of available houses for sale makes sectional title an appealing alternative".
He says sectional title units now make up 70% of the Atlantic seaboard’s market share.
There is little doubt that the future of property lies largely in the sectional title sector, says Paul French, commercial director for Coastal Property Group.
The rise in demand for housing in urban areas combined with limited land space and a need for greater convenience and security are just some of the driving factors.
Coastal Property Group agent Jason Paans says areas such as Cape Town’s CBD, the City Bowl and Atlantic seaboard continue to experience strong demand for sectional title property priced below R3m.
Over the past year, sellers achieved almost full asking price with a less than 3% on average below the listing price recorded for the market as a whole.
In the CBD the residential market has grown from about 750 people a decade ago to more than 7 000 residents and today a high-quality unit in a city apartment complex can sell for a median price of R50 000 per square metre, says Laurie Wener, Pam Golding Properties senior executive for Developments, Cape Region.
And, sometimes it becomes a bidding war as developers seek to secure land to meet the rising demand.
In Vredehoek, just above the city centre, this has seen some sellers achieving sales above their listing prices, says Sue Alison of Lew Geffen Sotheby’s International Realty.
“We saw this recently when three buyers were bidding for one property. First prize for developers is a row of older homes they can replace with multiple dwellings, so it can easily become a bidding war.”
Lew Geffen, chairman of Lew Geffen Sotheby’s International Realty, says the spike in demand in this market is illustrated in Vredehoek by an analysis of Propstats sales data.
“In 2012, the average sale price of an apartment in Vredehoek was R1.2 million and by the end of 2016, the average apartment had skyrocketed to R2.8m, which ultimately translates to a very healthy nominal year-on-year increase of 13.7% over five years.”
Dinis Martins, Seeff’s COO for the City Bowl and Atlantic seaboard, says the popularity of apartment living is fuelled by a number of factors.
“Because of the lack of work-life balance, people are starved for time and no longer want large homes and gardens, or to spend too much time commuting. (See story, above right)
“And apartment living often comes with added amenities such as on-site gyms, swimming pools and secure grounds to enjoy the outdoors. Plus the obvious factors of security, accessibility to the property market and compact living that is not short on space or luxury finishes.”
It used to be just young, job-market entrants and older people who would look for flats to rent, but these days, says Martins, it is across the board – even young families want flats to rent. And they don’t just come from within the metro, but from across the country.
This is good news for people wanting to invest in bricks and mortar, especially in view of the good yields right now, says Martins.
Landlords should achieve yields of around 6% to 7% this year.
“The biggest demand is in the R20 000 to R30 000-a-month range, generally for two and three-bedroom apartments.”
The short-term market has also seen tremendous growth with landlords achieving from R1 000 to R6 000 a day on average in Sea Point. Luxury properties can achieve from R20 000 a day.
In Vredehoek, Denise Schmidt, of Lew Geffen Sotheby’s International Realty in the City Bowl, adds that a major driving factor in the sectional title market in the area is also the strong demand for rental properties.
“Typically, a two-bedroom apartment in Vredehoek can fetch between R14 000 and R18 000 a month, with new two-bedroom flats even fetching up to R25 000, especially if they include secure off-street parking.”
* This story first appeared in Independent Property, which appears in Weekend Argus every Saturday.